Amicus Curiae Brief — Kiowa Tribe of Okla. v. Manufacturing Technologies, Inc.

No. 96-1037

In the Supreme Court of the Gnited States

:

i) i 1 pee

BRIEF FOR THE UNITED STATES

4S AMICUS CURIAE SUPPORTING PETITIONER

QUESTION PRESENTED

Whether the sovereign immunity from suit accorded to

Indian Tribes as a matter of federal law bars an action

brought in state court to recover money damages for a

breach of contract arising out of commercial activity

undertaken by a Tribe outside Indian country.

TABLE OF CONTENTS

Page

Interest of the United States ...................cccccccccceeeeeeeeeees 1

EES AT TTT 2

I nic sl na ct cscenesdnntecdeosocsopeosoce 6

Argument:

The tribal sovereign immunity recognized by

federal law precludes any suit against an Indian

Tribe in the absence of consent by the Tribe or

authorization by Congress ....................c0ccceeeeeees 7

A. Indian Tribes are neither States nor foreign

nations, but “domestic dependent nations” .. 8

B. The scope of tribal sovereign immunity is

governed by federal law .................000:.000000 12

C. Federal law precludes a suit for money

damages against an unconsenting Tribe ...... 15

1. Sovereign immunity bars suits based on

a Tribe's dealings with nonmembers ..... 16

2. Sovereign immunity bars suits against

a Tribe based on conduct that occurred

outside Indian country ...........00cccceees 20

3. State recognition of tribal sovereign

immunity is not a matter of comity

ST TD denénncrassenesnseqpecsocsescesessese 22

D. Policy considerations support the continued

recognition of tribal sovereign immunity in

cases involving commercial contracts .......... 26

EES SE nn 31

TABLE OF AUTHORITIES

Cases:

Aircraft Equip. Co. v. Kiowa Tribe of Oklahoma:

921 P.2d 359 (Okla. 1996) ....... 4, 5, 12, 17, 20, 21, 26, 29

939 P.2d 1143 (Okla. 1997), petition for cert.

I TI SII i scieeraitpisasenesséinn snesccsoccocoose 5-6

(II)

IV

Cases—Continued: Page

Ayers, In re, 123 U.S. 443 (1887) ..........ccccccccesecceeeees 22, 26

Banco Nacional de Cuba vy. Sabbatino, 376 U.S. 398

(BEB) cccccnsnictcimascstsstacrernedeniigeniiabantaintinnintagiatiininiinds 25

Blatchford v. Native Village of Noatak, 501 US.

TOD COBGED cciccusctncscsovisisnincnssantitessaniubininsiininimele 13, 15, 16

Cherokee Nation v. Georgia, 30 U.S. (15 Pet.) 1

CRODED cdnnelciviscidiniiccialiilnteds aia 2, 10, 11, 12, 12

County of Oneida v. Oneida Indian Nation, 470 U.S.

GOB CORED cccnicenticessveschnsimsusinigitbamntntaattlaitiasivriiin 10

Crow Dog, Ex parte, 109 U.S. 556 (1883) ..........cce 11

First Nat'l Bank in Altus v. Kiowa, Comanche &

Apache Intertribal Land Use Comm., 913 P.2d 299

CE, SEED cecieccteccancitecticnsitneithinininteanitilataaieiinsais 5, 8

Green v. Menominee Tribe, 233 U.S. 558 (1914) ....... 1s

Hoover v. Kiowa Tribe of Oklahoma, 909 P.2d 59

(Okla. 1995), cert. denied, 116 S. Ct. 1675 (1996). passim

Idaho v. Coeur d'Alene Tribe, 117 8. Ct. 2028

COED cecucincsvtctiniendidintanbintinieiedantiiieieaiies 13, 14, 16, 24

Johnson v. M'Intosh, 21 U.S. (8 Wheat.) 543

COED ccecniconnsciiiniannitendiditiniantibietintamatiiiangagsieesinis 8, 12

Lane v. Petia, 116 8. Ct. 2092 (1996) ....................... 2s

Lewis v. Sac & Fox Tribe of Oklahoma Housing

Auth., 896 P.2d 508 (Okla. 1994), cert. denied,

BOS B, CR, GE CID cencrcestiasevemessintitissanisinntitnieinene 4, 5, 22

Lone Wolf v. Hitchcock, 187 U.S. 553 (1908) .... 2,14, 15

Merrion v. Jicarilla Apache Tribe:

617 F.2d 5387 (10th Cir. 1980), aff'd, 455 U.S. 130

CHIEEED entndecossrecenscscstonsenmptensseunetennatinten secnsinenapts 27

GD Fe, FD ceereieentistitntinintiaesiinteiais 24

Mescalero Apache Tribe v. Jones, 411 U.S, 145

| ee 21, 22

Moe vy. Confederated Salish & Kootenai Tribes,

Oe ee 1]

Montana vy. Blackfeet Tribe, 471 U.S. 759 (1985) .... 10

Morton v. Mancari, 417 U.S. 585 (1974) .......... 10,11, 14

V

Cases—Continued: Page

National Farmers Union Ins. Cos. v. Crow Tribe,

Be ee 8, 11

Nevada vy. Hall, 440 U.S. 410 (1979) ................. 5, 23, 25

Oklahoma Tax Comm'n v. Citizens Band Potawa-

tomi Indian Tribe, 498 U.S. 505 (1991) ............ 15, 16, 17,

18, 20, 21, 22

Organized Village of Kake v. Egan, 369 U.S. 60

EA ee ae a ae eee ee 21, 22

Padilla v. Pueblo of Acoma, 754 P.2d 845 (N.M.

1988), cert. denied, 490 U.S. 1029 (1989) ...0000000.0.... 5, 23

Puyallup Tribe, Inc. v. Department of Game,

Ee DIU cecsciitainietniseineriiihiciedseantaiahias 16, 20, 21

Ramey Constr. Co. v. Apache Tribe of Mescalero

Reservation, 673 F.2d 315 (10th Cir. 1982) ............. 19

Republic of Me#ico v. Hoffman, 324 U.S. 30

STII . iasensitideeectctentiaaiadaieentimeaitieaitasa iti ciara datacentres 25

Sac & For Nation v. Hanson, 47 F.3d 1061 (10th

Cir.), cert. denied, 116 S. Ct. 57 (1995)... 5

Santa Clara Pueblo v. Martinez, 436 U.S. 49

ee en oT ee eT ET 16, 28

Seminole Tribe v. Florida, 1168. Ct. 1114 (1996)... 14-15

Seneca-Cayuga Tribe v. Oklahoma ex rel. Thompson,

874 F.2d 709 (10th Cir. 1989) .............cccccceceesccesseeeee 19

Strate v. A-1 Contractors, 117 S. Ct. 1404 (1997) ... 2?

Thebo v. Choctaw Tribe, 66 F. 372 (8th Cir.

Ria A RAS AS See Sree 16, 18

Three Affiliated Tribes v. Wold Engg, 476 U.S. 877

et Ee SEA LOSDD eS NE 16, 22, 25, 26

United States v. Gorham, 165 U.S. 316 (1897) ........ 1s

United States v. Kagama, 118 U.S. 375 (1886). 11, 12, 14

United States v. United States Fidelity & Guaranty

Co., 309 U.S. 506 (1940) .0.......ccccceeeeeeeee 11, 13, 16, 18, 28

United States v. Wheeler, 435 U.S. 313 (1978) .. 11, 14, 15

Verlinden B.V. v. Central Bank of Nigeria, 461 U.S.

SP GED citecteninrctrerscinncsasnteneinsinignaineuenenies 15, 22, 24, 25

Vi

Cases—Continued: Page

Washington v. Confederated Tribes, 447 U.S. 134

GRGD ctesyenesseccssnansstremnrcmnncinieniinanmnnatbeintsaiindnictinans 15

Weeks Constr., Inc. v. Oglala Sioux Housing Auth,

Oe © ae Ga Ge CR CE ccnctertincrestintceectintiis 19

White Mountain Apache Tribe v. Bracker, 448 U.S.

PDGF CEE ceniteenunncnnsssemadinitedimndunniiiaimiiansnintiy 13

Worcester v. Georgia, 31 U.S. (6 Pet.) 515 (1882). 8, 9, 10,

11, 12, 14

Young, Ex parte, 209 U.S. 123 (1907) ..........cccccceeeeeee 22

Constitution, treaties, statutes and regulation:

U.S. Const.:

Art. I:

SE GA. © anscninentnncnectinnimetainniniaipeenin 10, 24

D BD cassssesnpessensedntensentanterenmniaginpianiatenmaninitiatatagities 10

ee 8S fe § 10

SGI, TE escencewsccinstentcinsstigiaaeneninemnpagi 14

Articles of Confederation

| a ee 9

BR, TEE enccnsncscsiesnssnicnstuintittehiiieninliinnstiininsitiiihdeliivabaiginisianen 9

Treaty with the Comanches, Kiowa, and Apache,

Say HE, CE, DO RGR, TD cccnssttininite-costiniimenccsin 2

Treaty with the Comanche and Kiowa, Oct. 18, 1865,

96 GRR. WES cnsrssrenssrcrsstvesentansennntigiaisnementnaniienaintin 2

Treaty with the Kiowa, etc., May 26, 1837, 7 Stat.

IED ccrsscencsnemennennemenpveniinapuigpentenniettinniiniiagetamtendatitiiaenies 2

Treaty with the Kiowa and Comanche, Oct. 21, 1867,

Sa Ay SI. ssccahtaswmninniansniingaratiindnleatinesdnteiiadiisieaiiinitintinattiiatiigs 2

Treaty with the Kiowa, Comanche, and Apache,

a8, TE, BE, BS GR, BD cnccncrccncvcnnesnctsncissinsnesintonece 2

Act of Mar. 3, 1871, ch. 120, § 1, 16 Stat. 566 ............. 11

BD Din OE ccttrrncinssnnnsetnnsicerenictnncataitenmeiataitninans ll

Federally Recognized Indian Tribe List Act of 1994,

Pub. L. No. 108-454, 108 Stat. 4791:

SD DE Seer Ce GD. dettrncnectcsectnanectncssictesinntininesas 2

Vil

Statutes and regulation—Continued:

Foreign Sovereign Immunities Act, 28 U.S.C. 1602

CF BOG. cercrccrcerccccrccsccscescecccscescsonscossscesssscsecsasessesesessons

Indian Depredation Act of 1891, ch. 538, 26 Stat.

IEE cecansetetindinitncitessbiditananstntieemsegniengmandanenatniiiaiesdiabdagl

Indian Financing Act of 1974, 25 U.S.C. 1451 et seq.

Indian Reorganization Act of 1934, ch. 576, 48 Stat.

8 Lee FF en

Bf 8 le een

D4: Ree

Indian Self-Determination and Education Assistance

Bak, SS Fa Ge OF OUD, cccccnesentnsctesteeeneceetinemmen

ET ID ica aninctcndtentneiepntashitineetliintunuiomnsin

EE IED snatstncipenneieedeptnnsrecentnnuinnmanitigntes

Indian Tribal Justice Act, 25 U.S.C. 3601 ef seq. .......

BD ede SII , seriicecteninstesintnnteeneneanencnersennectbnstatinannns

Native American Housing Assistance and Self-

Determination Act of 1996, Pub. L. No. 104-330,

$ 2(3), 110 Stat. 4017 (to be codified at 25 U.S.C,

GOED cndecsnsunncctesscncncerssncscenestsereesenactesserpedsenseree

Oklahoma Indian Welfare Act, ch. 831, 49 Stat.

1967, 25 U.S.C. 501 ef seq.:

Pe SES CED chintpeinmnsanstdetndestctssinentocpncrsutevccce

DO Be er GN eccenececernsccnsncsencescnceninsecconsembcenee

OD | eee

RE RF eee

RL eee

Ii CII TIT ocstutactietienituntanatiens ebimenecetiiaanmaanntsitninnii

I, I cgi hice caattigd wetemagieacianiciintadadianatin

Navajo Nat. Code (1995):

I lated wemaninblliegtaninnstemabetmanre

TR EEE sdincetentienitnintancntnigniatabiieenineedtion

I RF aes SET - Sectigncteeceseunsiatenncictasteveninetteturinenminnsinne

Vill

Miscellaneous:

F. Cohen, Handbook of Federal Indian Law (1942) ..

61 Fed. Reg. (1996):

Se, GEASS exncesenesnsspepecenciqnanmstneneninsninbeiclitaiamamaniieste

DD, GEEOD cerresintciveacitientiinsibpunnitpainesitinnidibalisaiingiiianiiees

H.R. 2107, 105th Cong., Ist Sess. (1997) .............c.00000

GS FST EET Des. SEB CITED cccccrersssccevetnecesininscsttsnsessinn

S. Rep. No. 56, 105th Cong., Ist Sess. (1997) ..............

R. Strickland et al., Felix Cohen's Handbook of

Pemeral FUGiae C0 (CIGGR) ncccccoccscceccesscccesseccescccenses

BEDE) necvecescossncecevesorsasansosssesuseusenpeenannnstenbeasadpbontsesese

Tribal Sovereiqn Immunity: Hearing Before the

Senate Comm. on Indian Affairs, 104th Cong.,

BB OGD. CHD ennccswenssnsecersnenunsinatinicaatiahiididinentotin

20

In the Supreme Court of the United States

OCTOBER TERM, 1996

No. 96-1037

KIOWA TRIBE OF Of.:,AHOMA, PETITIONER

Vv.

MANUFACTURING TECHNOLOGIES, INC.

ON WRIT OF CERTIORARI TO THE

OKLAHOMA COURT OF APPEALS

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONER

INTEREST OF THE UNITED STATES

The United States’ interest in this case arises pri-

marily from the national government's special relation-

ship with the Indian Tribes. Continued recognition of

tribal sovereign immunity from suit is an important part

of the protection that federal law affords to tribal sover-

eignty, and it furthers Congress’s policy of encouraging

tribal self-determination and economic development. The

United States also has an interest in ensuring the obser-

vance of federal supremacy in all matters relating to the

Tribes. At the Court’s invitation, the Acting Solicitor

General filed a brief in this case at the petition stage

expressing the views of the United States.

(1)

2

STATEMENT

1. The United States entered into its first treaty with

the Kiowa Nation of Indians in 1887. 7 Stat. 533. Later

treaties with the Kiowa were concluded in 1853 (10

Stat. 1013), 1865 (14 Stat. 717), and 1867 (15 Stat. 581, 589).

Those treaties effectively recognized the Kiowa as a

“domestic dependent nation” and established a relationship

of trust and protection between the Tribe and the United

States. See generally Cherokee Nation v. Georgia, 30

U.S. (15 Pet.) 1, 17 (1831). The United States continues to

recognize the tribal government, now formally organized

under the Oklahoma Indian Welfare Act, 25 U.S.C. 503, as

having “the immunities and privileges available to * * *

federally acknowledged Indian tribes by virtue of their

government-to-government relationship with the United

States as well as the responsibilities, powers, limitations

and obligations of such tribes.” 61 Fed. Reg. 58,211, 58,213

(1996) (quoting 25 C.F.R. 83.2); see also 25 U.S.C. 479a,

479a-1.'

In their 1867 treaties, 15 Stat. 581, 589, the Kiowa,

Comanche and Apache Tribes retained, from their original

tribal lands, well over 2,000,000 acres as a permanent

reservation. See Lone Wolf v. Hitchcock, 187 U.S. 558

(1903) (describing history). Through later shifts in law

and policy, however, the United States divested the Kiowa

of the majority of the reserved lands, in exchange for

allotments of land to individual members of the Tribe and

cash compensation to be held in trust for the Tribe by the

United States. /bid. We are informed that the Tribe today

retains some 1,200 acres of land in Oklahoma, much of it in

scattered parcels, as well as an interest in approximately

| We are informed that the Tribe presently has approximately

11,000 enrolled members, of whom a smaller number are actively in-

volved in tribal affairs.

3

3,000 acres of land held by the United States in trust for

the Kiowa, Comanche and Apache Tribes.

2. The record in this case is sparse. It appears that a

tribal entity entered into a letter agreement dated March

19, 1990, in which it agreed to purchase stock then held by

respondent in an Oklahoma corporation known as Clinton-

Sherman Aviation, Inc. (CSA). See Pet. App. 2; J.A. 9, 49-

50. On April 3, 1990, the then-Chairman of the Tribe's

Business Committee signed, in the name of the Tribe, a

short-term promissory note (the Note) promising to pay

respondent $285,000, with interest at an annual rate of 10%

in the ordinary course and 15% after any default. J.A. 11-

14, 67, 77-78.

The face of the Note indicates that it was signed at

Carnegie, Oklahoma, where the Tribe maintains a Tribal

Complex on land held in trust for the Tribe by the

United States. J.A. 11, 14; see J.A. 16. Respondent’s

petition seeking enforcement of the Note alleges (J.A. 10),

however, that the Note was “executed and delivered to

[respondent] in Oklahoma City,” and petitioner has not

contested that allegation. Unless otherwise directed, pay-

ments were to be made at respondent’s offices in Okiahoma

City. J.A. 11. The Note fails to specify a governing law,

but in a paragraph entitled “Waivers and Governing Law”

it provides: “Nothing in this Note subjects or limits the

sovereign rights of the Kiowa Tribe of Oklahoma.” J.A. 14.

The Note called for only two payments, to be made 30

and 90 days after the Note was signed. J.A. 11. The Tribe

did not make either payment. J.A. 78. It further appears,

from the decision in a related case, that a similar finan-

cial undertaking given by the Tribe in connection with

the acquisition of additional shares of CSA was secured

by the acquired shares, which subsequently proved to be

worthless. Pet. App. 3; Hoover v. Kiowa Tribe of Okla-

homa, 909 P.2d 59, 60 & n.3 (Okla. 1995), cert. denied, 116

4

S. Ct. 1675 (1996); see also Aircraft Equip. Co. v. Kiowa

Tribe of Oklahoma, 921 P.2d 359, 360 & n.1 (Okla. 1996)

(default on promissory note assumed in related transac-

tion).

3. Three years after payment was due, respondent sued

the Tribe in state court seeking judgment on the Note.

Pet. App. 2; J.A. 1 (petition filed Aug. 24, 1993). The Tribe

moved to dismiss for lack of jurisdiction, in part on the

ground that the Tribe had never waived its sovereign

immunity from suit, and therefore could not be sued for

money damages. See Pet. App. 2;J.A. 15. The court denied

that motion (J.A. 48), and the Tribe answered, again

asserting its immunity from suit (J.A. 50). The court

granted respondent’s motion for summary judgment,

awarding respondent a total of $445,471 in principal and

accrued interest, together with attorneys’ fees and costs.

J.A. 77-79.

The Oklahoma Court of Appeals affirmed (Pet. App. 1-4),

and the Oklahoma Supreme Court declined discretionary

review (see Pet. 2). The court of appeals rejected the

Tribe’s sovereign immunity argument in this case on the

authority of Hoever v. Kiowa Tribe of Oklahoma, which

arose out of the same transaction and involved essentially

the same facts. In Hoover, the Oklahoma Supreme Court

referred to its earlier decision in Lewis v. Sac & Fox

Tribe of Oklahoma Housing Authority, 896 P.2d 508

(1994), cert. denied, 116S. Ct. 476 (1995), which held (id. at

507-512) that the Oklahoma courts are generally empow-

ered to decide civil cases arising within their territorial

jurisdiction, whether those cases are governed by fed-

eral or state law. Although Lewis recognized that a

special jurisdictional inquiry was appropriate “whenever

Indian interests are tendered in a controversy,” it held

that “[o)jnly that litigation which is explicitly withdrawn

by Congress or that which infringes upon tribal self-

5

government stands outside the boundaries of permissible

state-court cognizance.” /d. at 508.

Lewis did not address the question of sovereign

immunity. 896 P.2d at 506 n.15, 511 & n.59; Hoover, 909

P.2d at 61. In ruling on that issue, Hoover cited ap

provingly the New Mexico Supreme Court’s decision in

Padilla v. Pueblo of Acoma, 754 P.2d 845 (1988), cert.

denied, 490 U.S. 1029 (1989), which held that a New Mexico

court could decide a claim brought against a Tribe by a

private party alleging a breach of contract in connection

with off-reservation commercial activity undertaken by

the Tribe. Hoover adopted Padilla’s reasoning that a

forum State’s decision to recognize a Tribe’s sovereign

immunity from suit on claims arising within the state

courts’ usual territorial and subject-matter jurisdiction

was no different from the forum State’s decision to accord

another State immunity from claims arising out of acti-

vities undertaken within the forum State. Hoover, 909

P.2d at 62; see Padilla, 754 P.2d at 850-851. Citing this

Court’s decision in Nevada v. Hall, 440 U.S. 410 (1979),

Padilla held (754 P.2d at 850) that the decision was “solely

a matter of comity.” Because Oklahoma, like New Mexico,

allows its courts to entertain suits against itself for

breach of contract, Hoover concluded (909 P.2d at 62) that

“a contract between an Indian tribe and a non-Indian is

enforceable in state court when the contract is executed

outside of Indian Country.” Despite an acknowledged

conflict with the Tenth Circuit’s decision in Sac & For

Nation v. Hanson, 47 F.3d 1061, cert. denied, 116 S. Ct. 57

(1995), the Oklahoma Supreme Court has subs equently

reaffirmed Hoover’s holding in First National Bank in

Altus v. Kiowa, Comanche & Apache Intertribal Land

Use Committee, 913 P.2d 299, 301 (1996); Aircraft Equip-

ment Co. v. Kiowa Tribe of Oklahoma, 921 P.2d 359 (1996);

and Aircraft Equipment Co. v. Kiowa Tribe of Oklahoma,

6

939 P.2d 1143, 1145-1148 (1997) (also upholding a judgment

creditor’s right to use against a Tribe the remedies ordi-

narily available in state court, including seizure of tribal

tax revenues), petition for cert. pending, No. 97-216 (filed

July 30, 1997).

SUMMARY OF ARGUMENT

The Oklahoma courts have asserted jurisdiction to hear

and determine a suit for money damages brought directly

against a federally recognized Indian Tribe. In the

absence of consent by the Tribe or authorization by Con-

gress, federal law forbids that exercise of state judicial

power.

The Indian Tribes are a continuation of self-governing

political communities whose original sovereignty predates

that of the States. The question of who should represent

this Nation in dealing with the Tribes was finally resolved

by the adoption of the Constitution, which committed

the field of Indian relations exclusively to the national

government. The ensuing 200 years of negotiation, armed

conflict, territorial consolidation, and successive federal

policies have shaped for the Tribes a unique place in the

Nation’s political and legal history, as separate sovereigns

under the dominant sovereignty and protection of the

United States. The same history teaches that, while

tribal sovereignty predates the Constitution, it is now

federal law that both protects that sovereignty and defines

its limits.

As this Court has long recognized and recently re-

affirmed, sovereign immunity bars any suit against a

Tribe for money damages in the absence of the Tribe’s

consent or congressional abrogation of the Tribe’s im-

munity. The Court’s cases make clear that a Tribe’s

immunity extends to suits based on tribal dealings with

nonmembers, and to suits based on conduct that occurred

outside Indian country. Because the Constitution vests

7

power over Indian affairs in the national government, and

because both the States and the Tribes are therefore

subject to a comprehensive body of federal law regulating

those affairs, the States are not free to choose, as a matter

of sovereign comity, whether or not to honor the tribal

immunity recognized by this Court’s cases. The scope

afforded that immunity is a matter of supervening federal

law.

Finally, even if the Oklahoma courts (or this Court)

were free to resolve the question of tribal immunity as a

matter of policy, this case suggests no persuasive reason

to depart from the traditional rule. A sovereign’s immu-

nity from suit for money damages neither leaves potential

commercial counterparties unable to protect their inter-

ests, nor interferes with the sovereign’s ability to man-

age its commercial affairs. The rule of immunity does,

however, at least partially protect the public represented

by a sovereign—including the members of an Indian

Tribe—from liability for the negligence, malfeasance, or

naivete of its agents. The few facts disclosed by the record

in this case are consistent with those general policy

observations; and we see no reason to assume that recogni-

tion of petitioner’s sovereign immunity from suit will

cause unfairness to respondent, rather than preventing an

equivalent unfairness to the Tribe.

ARGUMENT

THE TRIBAL SOVEREIGN IMMUNITY RECOGNIZED

BY FEDERAL LAW PRECLUDES ANY SUIT AGAINST

AN INDIAN TRIBE IN THE ABSENCE OF CONSENT

BY THE TRIBE OR AUTHORIZATION BY CONGRESS

In rejecting petitioner’s sovereign immunity defense to

this action, the Oklahoma Court of Appeals relied on the

Oklahoma Supreme Court’s decisions in Hoover v. Kiowa

Tribe of Oklahoma, 909 P.2d 59, 62 (1995), cert. denied, 116

8

S. Ct. 1675 (1996), and First National Bank in Altus v.

Kiowa, Comanche & Apache Intertribal Land Use

Committee, 913 P.2d 299, 300 (1996). Those decisions did

not question that Indian Tribes are entitled to sovereign

immunity from suit in certain circumstances, but they

held that tribal sovereign immunity does not bar a suit in

state court to enforce “a contract between an Indian tribe

and anon-Indian * * * when the contract is executed

outside of Indian Country.” Hoover, 909 P.2d at 62. That

conclusion is incorrect as a matter of federal law.

A. Indian Tribes Are Neither States Nor Foreign

Nations, But “Domestic Dependent Nations”

The Indian Tribes of the United States are a direct

continuation of “self-governing political communities

that were formed long before Europeans first settled

in North America.” National Farmers Union Ins. Cos. v.

Crow Tribe, 471 U.S. 845, 851 (1985). Their original sover-

eign character therefore predates that of the original

States, which themselves grew out of the separate “self-

governing political communities” established by European

settlers when they arrived on these shores. In their early

relations, the European colonies, and their sponsoring

governments, although they asserted “title” to the new

continent as against all other Europeans by right of

“discovery” (Johnson v. M’Intosh, 21 U.S. (8 Wheat.) 543,

572-574 (1823)), nonetheless recognized the native com-

munities that they encountered as independent powers—

“formidable ene:nies, or effective friends.” Worcester v.

Georgia, 31 U.S. ( Pet.) 515, 546 (1832); see Johnson, 21

U.S. at 590. Relations with the various Tribes were

conducted by governments, and embodied in treaties. See,

e.g., Worcester, 21 U.S. at 542-548; Johnson, 21 U.S. at 600-

604; F. Cohen, Handbook of Federal Indian Law 46-47

(1942).

9

The advent of colonial independence “found Congress in

the exercise of the same powers of peace and war, in our

relations with Indian nations, as with those of Europe.”

Worcester, 31 U.S. at 558. The practice of dealing with

the Tribes as separate powers continued under the first

government of the United States, but with considerable

confusion of authority as between the national government

and those of the individual States. Article IX of the

Articles of Confederation conferred on Congress “the sole

and exclusive right and power of * * * regulating the

trade and managing all affairs with the Indians,” but only

with respect to those Indians who were “not members

of any of the States,” and further “provided that the

legislative right of any State within its own limits be not

infringed or violated.”* Under the power that was

granted, and the treaty power also granted to Congress by

Article IX, the national government entered into treaties

with several Tribes. See Worcester, 31 U.S. at 548-554;

Cohen, Handbook 47-49.

The division of responsibility for Indian affairs between

state and national governments under the Articles of Con-

federation proved, according to James Madison, a source

of “frequent perplexity and contention in the federal

councils”:

[H]ow the trade with Indians, though not members of

a State, yet residing within its legislative jurisdiction

can be regulated by an external authority, without so

far intruding on the internal rights of legislation, is

absolutely incomprehensible.

The Federalist No. 42, at 269 (Madison) (C. Rossiter ed.,

1961). New York, for example, made separate treaties with

2 Article VI also recognized the right of an individual State to

take up arms if it “received certain advice of a resolution being formed

by some nation of Indians to invade such State.”

10

some Tribes (see Cherokee Nation v. Georgia, 30 U.S.

(5 Pet.) 1, 17 (1831); County of Oneida v. Oneida Indian

Nation, 470 U.S. 226, 231 (1985)); and “[t}he ambiguous

phrases which followed] the grant of power to the United

States [in the Articles], were so construed by the states of

North Carolina and Georgia as to annul the power itself,”

leading’to “discontents and confusion” (Worcester, 31 U.S.

at 559)). The question of state relations with the Indian

Tribes was therefore much on the minds of delegates to

the Constitutional Convention of 1787. It was resolved by

ceding to the national government not only all power to

make treaties (see Art. I, § 10; Art. II, § 2, Cl. 2), but also

all power “[tlo regulate Commerce with foreign Nations,

and among the several States, and with the Indian Tribes”

(Art. I, $8, Cl. 3). See Worcester, 31 U.S. at 559; Montana

v. Blackfeet Tribe, 471 U.S. 759, 764 (1985) (“The Con-

stitution vests the Federal Government with exclusive

authority over relations with the Indian tribes.”); Morton

v. Mancari, 417 U.S. 535, 551-552 (1974). Accordingly,

“{w]ith the adoption of the Constitution, Indian relations

became the exclusive province of federal law.” County of

Oneida, 470 U.S. at 234.

For some 80 years after the adoption of the Con-

stitution, the United States continued to conduct rela-

tions with Indian Tribes through a combination of negoti-

ated treaties and armed force. See generally, e.g., Cohen,

Handbook 49-66.° In 1871 Congress, while affirming the

continued validity of previous treaties, declared that

“hereafter no Indian nation or tribe within the territory of

the United States shall be acknowledged or recognized as

an independent nation, tribe, or power with whom the

3 The last treaty negotiated with petitioner, in 1867, was designed

in part to conclude peace with Tribes, including petitioner, that had

joined the Sioux in hostilities against the United States. Cohen,

Handbook 65.

11

United States may contract by treaty.” Act of Mar. 3,

1871, ch. 120, § 1, 16 Stat. 566, codified at 25 U.S.C. 71. For

years thereafter, the United States dealt with the Tribes

by way of agreements that “differed from formal treaties

only in that they were ratified by both houses of Congress

instead of by the Senate alone.” Cohen, Handbook 67.

After a period during which national policy favored

allotting tribal lands to individual Indians and making

unallotted lands available for non-Indian settlement, with

a view to the eventual termination of the reservation

system, Congress ultimately adopted a new approach, and

new statutes, designed to foster tribal economic and

political self-determination, within the limits of full

participation as a unique but integral part of the modern

United States. See generally id. at 83-87, 206-217; Moe v.

Confederated Salish & Kootenai Tribes, 425 U.S. 463, 478-

479 (1976), Mancari, 417 U.S. at 552-555.

This brief reminder of a long history suggests the

underpinnings of a point made repeatedly in this Court’s

cases: Indian Tribes have a unique place in this Nation’s

history and, consequently, in its laws. See, e.g., National

Farmers Union Ins. Co., 471 U.S. at 851; United States v.

Wheeler, 435 U.S. 313, 322-323 (1978); Mancari, 417 U.S.

at 551-553; United States v. United States Fidelity &

Guaranty Co., 309 U.S. 506, 512-513 (1940), United States

v. Kagama, 118 U.S. 375, 381-382 (1886); Ex parte Crow

Dog, 109 U.S. 556, 568-570 (1883). Self-governing societies

in original enjoyment of large portions of this continent,

the Tribes were, from the beginning of European set-

tlement, commonly recognized as separate “states” or

“nations” (see Worcester, 31 U.S. at 561; Cherokee Nation,

30 U.S. at 16). As the European colonies themselves grew

into States and then into a Nation, however, they asserted

first an exclusive right to deal with the Tribes, and

ultimately a claim to complete territorial dominion over

12

what is now the United States. See generally Kagama,

118 U.S. at 381; Johnson, supra. By treaty where possible,

by force of arms where it was thought necessary, the

Tribes were brought under the dominant sovereignty of

the new national government, so that what was plainly

“Indian territory” was nonetheless also considered to lie

“within the jurisdictional limits of the United States.”

Cherokee Nation, 30 U.S. at 17; see Johnson, 21 U.S. at

588 (“Conquest gives a title which the Courts of the con-

queror cannot deny.”). Because the Tribes “occuplied] a

territory to which we assertied] a title independent of

their will,” they could not be considered foreign nations—

“not * * * because a tribe may not be a nation, but

because it is not foreign to the United States.” Cherokee

Nation, 30 U.S. at 17, 19. Nor, however, was their original

sovereignty destroyed by virtue of their coming under the

dominant sovereignty and protection of the United States.

See Worcester, 31 U.S. at 560-561. Instead they became,

in Chief Justice Marshall’s precisely descriptive phrase

(Cherokee Nation, 30 U.S. at 17), “domestic dependent

nations.”

B. The Scope Of Tribal Sovereign Immunity Is Gov-

erned By Federal Law

In Aircraft Equipment Co. v. Kiowa Tribe of Okla-

homa, 921 P.2d 359, 361 (1996), the Oklahoma Supreme

Court characterized the issue of tribal sovereign immu-

nity as “a state law question.” That is incorrect.

As we have discussed, the Constitution granted the

United States sole power to regulate relations with the

Tribes, in conscious response to problems _aused by

the previous division of authority between the national

government and the States. Neither the Tribes nor their

members were represented at the Constitutional Con-

vention: The Tribes ceded none of their sovereignty there,

13

and their people conferred none on the new government of

the United States. See Idaho v. Coeur d'Alene Tribe, 117

S. Ct. 2028, 2034 (1997); Blatchford v. Native Village

of Noatak, 501 U.S. 775, 782 (1991). The creation of a

strong national government with exclusive responsibility

for Indian relations did, however, directly affect the Tribes

during the ensuing 150 years of this Nation’s consolida-

tion and expansion.

It was the United States—not any individual State—

with which the Tribes negotiated; with which from time

to time they fought; with which they concluded treaties

of peace, friendship and protection; and the dominant

sovereignty of which they were ultimately persuaded or

constrained to accept. Because that dominant sovereignty

is different in origin from the sovereignty exercised by

the federal government with respect to the States, it is

also different in kind and extent. All remaining rights of

tribal sovereignty and self-government, unlike the similar

rights enjoyed by the people of the States as such, are

“ultimately dependent on and subject to the broad power

of Congress.” White Mountain Apache Tribe v. Bracker,

448 U.S. 136, 143 (1980); see also United States Fidelity &

Guaranty Co., 309 U.S. at 512 (“It is as though the immu-

nity which was [the Tribes’) as sovereigns passed to the

United States for their benefit, as their tribal properties

did.”).

At the same time it was the United States, rather than

any individual State, that assumed, by the assertion of

ultimate sovereignty over the Tribes, concomitant respon-

sibilities to them and to their members. This Court has

long held that the Tribes’ “relation to the United States

resembles that of a ward to his guardian” (Cherokee Na-

tion, 30 U.S. at 17)); and Congress has recently reiterated

that “through treaties, statutes, and historical relations

with Indian tribes, the United States has undertaken a

14

unique trust responsibility to protect and support Indian

tribes and Indian people.” Native American Housing

Assistance and Self-Determination Act of 1996, Pub. L.

No. 104-330, § 2(3), 110 Stat. 4017, to be codified at 25

U.S.C. 4101(3). Compare Kagama, 118 U.S. at 383-384

(“These Indian tribes are the wards of the nation. * * *

They owe no allegiance to the States, and receive from

them no protection. Because of the local ill feeling, the

people of the States where they are found are often their

deadliest enemies.”); see also, e.g., Mancari, 417 U.S. at

552; Lone Wolf v. Hitchcock, 187 U.S. 553, 564-568 (1903).

The United States has, therefore, not only plenary power

over the field of Indian affairs, but a special responsibility

to the Tribes and their members.

Federal law did not create tribal sovereignty, which

predates the Constitution. See, e.g., Wheeler, 435 U.S. at

322-330; id. at 328 (“none of these [federal] laws created

the Indians’ power to govern themselves”). It was not

judicial decisions. that originated a doctrine of tribal

sovereignty, which might then be subject to modification

by the courts, state or federal, in light of the passage of

time or changes in circumstance. Instead, the Court

has consistently recognized that the Tribes’ sovereignty

stems directly from their aboriginal possession and

occupancy, as self-governing political communities, of

territory that has since been incorporated into the United

States. See, e.g., id. at 322-323; Worcester, 31 U.S. at 558-

561. The Constitution carried forward that fundamental

understanding of the sovereign status of the Tribes, and it

presumes the continuation of that sovereignty. See

Wheeler, supra (applying doctrine of “dual sovereignty”

to permit successive federal and tribal prosecutions); com-

pare Coeur d'Alene, 1178S. Ct. at 2033-2034 (the Eleventh

Amendment reflects a “broader concept of [sovereign] im-

munity, implicit in the Constitution”); Seminole Tribe v.

15

Florida, 1168. Ct. 1114, 1122 (1996) (same); Blatchford, 501

U.S. at 779. The sovereignty of Tribes is therefore no less

a first principle than the sovereignty of the States, or of

the United States; and although subject to the plenary

authority of Congress, it is not subject to judicial defea-

sance.

With the adoption of the Constitution the Tribes became

subject, as we have described, to the dominant sovereignty

of the United States. But decisions involving the as-

sertion of that dominance, in derogation of the Tribes’ pre-

existing sovereignty, rest with the political Branches of

the national government. See, e.g., Lone Wolf, 187 U.S. at

565, 568 (“Plenary authority over the tribal relations of

the Indians has been exercised by Congress from the

beginning, and the power has always been deemed a po-

litical one, not subject to be controlled by the judicial

department of the government.”). All questions concern-

ing the extent and nature of tribal sovereignty are

therefore questions of federal law; but the fundamental

rule to be applied by the courts—state or federal—is that

tribal sovereignty retains its full vitality except to the

extent that it has been divested through the national

political process. See Wheeler, 435 U.S. at 323; Washing-

ton v. Confederated Tribes, 447 U.S. 134, 153-154 (1980)

(sovereignty may be divested where inconsistent with

overriding national interests, but “it must be remembered

that tribal sovereignty is dependent on, and subordinate to,

only the Federal Government, not the States”); compare

Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480,

493 (1983).

C. Federal Law Precludes A Suit For Money Damages

Against An Unconsenting Tribe

In Oklahoma Tax Commission v. Citizens Band

Potawatomi Indian Tribe, 498 U.S. 505, 509 (1991), this

16

Court reaffirmed that “{s]uits against Indian tribes are

* * * barred by sovereign immunity absent a clear waiver

by the tribe or congressional abrogation.” That statement

reflects longstanding precedent. See, «.g., Coeur d’Alene,

117 S. Ct. at 2034 (“the plan of the convention did not

surrender Indian tribes’ immunity for the benefit of the

States”); Blatchford, 501 U.S. at 782 (“We have repeatedly

held that Indian tribes enjoy immunity against suits by

States.”); Santa Clara Pueblo v. Martinez, 436 U.S. 49,

58 (1978) (“Indian tribes have long been recognized as pos-

sessing the common-law immunity from suit traditionally

enjoyed by sovereign powers.”); Three Affiliated Tribes v.

Wold Eng’g, 476 U.S. 877, 890-891 (1986) (“{IJn the absence

of federal authorization, tribal immunity, like all aspects

of tribal sovereignty, is privileged from diminution by the

States.”); Puyallup Tribe, Inc. v. Department of Game,

433 U.S. 165, 172-173 (1977); United States Fidelity &

Guaranty Co., 309 U.S. at 512-515; Thebo v. Choctaw

Tribe, 66 F. 372, 374-376 (8th Cir. 1895). The Oklahoma

Supreme Court’s holding that “a contract between an

Indian tribe and a non-Indian is enforceable in state court

when the contract is executed outside of Indian Country”

(Hoover, 909 P.2d at 62) is incompatible with that estab-

lished principle of federal law.

1. Sovereign immunity bars suits based on a Tribe’s

dealings with nonmembers

Potawatomi makes clear that tribal sovereign immu-

nity bars an action for monetary relief, even if the action

is based on a Tribe’s commercial dealings with non-

members. In that case, Oklahoma sought to recover $2.7

million from the Citizen Band Potawatomi Indian Tribe

for taxes on cigarettes sold to nonmembers by a store

owned and operated by the Tribe. See 498 U.S. at 507.

This Court held that the Tribe was obligated to collect

17

state taxes on future cigarette sales to nonmembers, but

that tribal sovereign immunity barred a money judgment

against the Tribe for unpaid taxes on past sales. Jd. at 509-

511, 514.

The Court specifically refused Oklahoma’s invitation

“to construe more narrowly, or abandon entirely, the doc-

trine of tribal sovereign immunity.” 498 U.S. at 510. The

State argued that “tribal business activities * * * are

now so detached from traditional tribal interests that the

tribal-sovereignty doctrine no longer makes sense,” and

that the doctrine therefore “should be limited to the tribal

courts and the internal affairs of tribal government.”

Ibid.‘ In rejecting that argument, the Court observed

that Congress “has always been at liberty to dispense with

* * * tribal immunity or to limit it,” and “has occasion-

ally authorized limited classes of suits against Indian

tribes,” but that it “has never authorized suits to enforce

tax assessments,” and “has consistently reiterated its

approval of the immunity doctrine.” Jbid. The Court

concluded that, although the State might have alternative

methods of collecting the taxes at issue, there was “no

doubt that sovereign immunity bar{red] the State from

pursuing the most efficient remedy” by bringing suit

directly against the Tribe. /d. at 514.

As the Court noted in Potawatomi, “Congress has

consistently reiterated its approval of the immunity doc-

trine,” which is consistent with “Congress’ desire to

promote the goal of Indian self-government, including its

‘overriding goal’ of encouraging tribal self-sufficiency and

economic development.” 498 U.S. at 510 (internal quota-

tion marks omitted), citing the Indian Financing Act

* Compare Hoover, 909 P.2d at 62 (“Only that litigation which

* * * infringes upon tribal self-government stands outside the bound-

aries of permissible state-court cognizance.”); Aircraft Equip. Co., 921

P.2d at 362 (discussing commercial context).

18

of 1974, 25 U.S.C. 1451 et seqg., and the Indian Self-

Determination and Education Assistance Act (ISEAA), 25

U.S.C. 450 et seq.; see 25 U.S.C. 450n (nothing in ISEAA,

which establishes a framework of financial assistance

for Tribes, is to be construed as “affecting, modifying,

diminishing, or otherwise impairing the sovereign immu-

nity from suit enjoyed by an Indian tribe”). Moreover,

while~ “Congress has occasionally authorized limited

classes of suits against Indian tribes” (Potawatomi, 498

U.S. at 510), respondent has not alleged that any such

provision is applicable to this case.° The absence of any

such authorization reinforces the conclusion that tribal

governments remain protected by the established rule

of sovereign immunity. While certain tribal entities spe-

cially chartered to engage in commercial activities may be

subject to suit in some cases, the promissory note on

which respondent sued was signed in the name of the Tribe

itself, and it specifically reserved the Tribe’s “sovereign

rights.” J.A. 14, 67-68.°

° Compare 25 U.S.C. 450f(eX3) (providing for limited waivers by

insurers in the context, and to the extent, of federally mandated

liability insurance); 25 U.S.C. 2710(d)(7)\A)(ii) (authorizing suits by

States in federal court to enjoin certain gaming activity on tribal

lands); United States Fidelity & Guaranty Co., 309 U.S. at 509, 513

(special statutory authorization for cross-claims); Green v. Menominee

Tribe, 233 U.S. 558 (1914) (special jurisdictional statute for adjudication

of claims by Indian traders); United States v. Gorham, 165 US. 316

(1897) (discussing Indian Depredation Act of 1891); Thebo, 66 F. at 373-

374 & n.1.

® In the Indian Reorganization Act of 1934 (IRA), ch. 576, 48 Stat.

984, 25 U.S.C. 461 et seg., Congress authorized most Tribes to adopt

constitutions for the conduct of their governments (IRA § 16, 25 U.S.C.

476) and to receive separate charters of incorporation to enable them to

engage in business activities through separate entities (IRA § 17, 25

U.S.C. 477). The principal reason for Section 17 of the IRA was a con-

cern that non-Indian entities would not enter into commercial dealings

with a tribal government because of its immunities. 65 Interior Dec.

19

Nothing that has occurred since the decision in

Potawatomi calls its reasoning into question. To the

contrary, in 19938 Congress enacted the Indian Tribal

Justice Act, 25 U.S.C. 3601 et seq., which again recognizes

the “inherent sovereignty of Indian tribes” and confirms

Congress’s understanding that the United States has a

“trust responsibility” that generally includes “the protec-

tion of the sovereignty of each tribal government.” 25

U.S.C. 3601; see also 25 U.S.C. 479a note (congressional

findings). Congress has recently considered, but to date

has not enacted, proposals specifically designed to abro-

gate, or to require the waiver of, tribal sovereign immu-

nity under certain circumstances. See, e.g.,S. Rep. No. 56,

105th Cong., Ist Sess. 63-64 (1997) (discussing Section 120

of the Department of the Interior and Related Agencies

Appropriations Bill, 1998, H.R. 2107, as reported to the

Senate, with amendments, by the Senate Committee

483, 484 (1958); R. Strickland et al., Felix Cohen's Handbook of Federal

Indian Law 325-326 (1982) (1982 Cohen). The Oklahoma Indian Wel-

fare Act (OTWA), ch. 831, §3, 49 Stat. 1967 (1936), authorizes Okla-

homa Tribes, such as petitioner, to adopt constitutions and to receive

corporate charters equivalent to those issued under the IRA. 25 U.S.C.

503. Charters of incorporation issued under Section 17 of the IRA often

contain a clause expressly allowing the corporation to sue or be sued.

Similarly, the OIWA authorizes any ten or more individual Oklahoma

Indians to form a cooperative association chartered by the Secretary of

the Interior, and the Act expressly provides that such an association

“may sue and be sued” in state or federal court. 25 U.S.C. 504, 505.

Some courts have construed “sue or be sued” clauses in IRA charters to

waive the immunity of the incorporated entity from suit. See, ¢.g.,

Weeks Constr., Inc. v. Oglala Sioux Housing Auth., 797 F.2d 668, 671

(8th Cir. 1986). Any such waiver is limited, however, to the business

dealings and assets of that corporation, and does not extend to the

Tribe in its sovereign capacity. 1982 Cohen at 325-326; see, e.g., Seneca-

Cayuga Tribe v. Oklahoma ex rel. Thompson, 874 F.2d 709, 715 n.9

(10th Cir. 1989); Ramey Constr. Co. v. Apache Tribe of Mescalero

Reservation , 673 F.2d 315, 320 (10th Cir. 1982).

20

on Appropriations); Tribal Sovereign Immunity: Hearing

Before the Senate Comm. on Indian Affairs, 104th Cong.,

2d Sess. (1996). Congress is the appropriate forum for the

consideration and disposition of such proposals, because

it has both the constitutional authority and the institu-

tional competence, as a deliberative national legislative

and policy-making body, to consider and reconcile the

rights and interests of States, Tribes, and individual

citizens.’

2. Sovereign immunity bars suits against a Tribe

based on conduct that occurred outside Indian

country

The rule of sovereign immunity is not rendered inap-

plicable in this case simply because the contract at issue

was evidently negotiated, and the relevant documents were

allegedly signed, within the State’s territorial jurisdiction

and not on land held by or for the Tribe or its members.

Compare Hoover, 909 P.2d at 62 (Tribe may be sued on

contract “executed outside of Indian Country”). This

Court has previously refused to draw just such a dis-

tinction. In Puyallup Tribe, Inc. v. Department of Game,

a Tribe challenged a state court’s judgment that asserted

Practical and policy considerations have led many sovereigns,

including the United States, to waive their immunity from suit under

some circumstances. See, e.g., page 27, infra; 28 U.S.C. 1346, 1491,

2674. On the other hand, Congress's consistent support for tribal

immunity has been predicated in part on its “desire to promote the

goal of Indian self-government, including its overriding goal of encour-

aging tribal self-sufficiency and economic development.” Potawatomi,

498 U.S. at 510 (internal quotation marks omitted). Those goals could

be seriously compromised—and the federal fise additionally burdened—

by exposing Tribes to the burdens of litigation and the enforcement of

money judgments against tribal treasuries, including the seizure of

tribal tax revenues. See Aircraft Equip. Co., supra. Only Congress is

in a position to reconcile such legitimate but conflicting policy concerns.

Pe ee ee

21

“jurisdiction to regulate the fishing activities of the Tribe

both on and off its reservation.” 433 U.S. at 167. This

Court held that a claim of sovereign immunity was “well

founded” to the extent that it was “advanced on behalf of

the Tribe, rather than the individual [Indian] defendants.”

Id. at 167-168; see id. at 172-173. Accordingly, the Court

held that “the portions of the state-court order that

involve{d] relief against the Tribe itself must be vacated

in order to honor the Tribe’s valid claim of immunity.”

Id. at 173. In reaching that conclusion, the Court did

not distinguish the Tribe’s activities on reservation land

from those occurring elsewhere, observing simply that

“(albsent an effective waiver or consent, it is settled that a

state court may not exercise jurisdiction over a recog-

nized Indian tribe.” Jd. at 172.

The Oklahoma Supreme Court relied on cases such as

Mescalero Apache Tribe v. Jones, 411 U.S. 145 (1973), and

Organized Village of Kake v. Egan, 369 U.S. 60 (1962).

See Hoover, 909 P.2d at 61 (quoting Mescalero and Kake),

Aircraft Equip. Co., 921 P.2d at 361-362 & n.2 (same).

Those cases hold that a State may have authority to tax or

regulate the activities of Tribes or individual Indians who

engage in conduct (such as operating a ski resort, as in

Mescalero, or fishing, as in Kake) within the State but

outside Indian country. As Potawatomi makes clear (see

498 U.S. at 512-514), however, there is a difference between

the right to demand compliance with state law and the

means that may be available to enforce such compliance.

In that respect an immune Tribe is no different from a

State, which may be subject to certain legal obligations,

yet not subject to a suit directly against the State to

enforce them; or a foreign sovereign, which has no “right”

to engage in commercial activity within a State without

complying with that State’s valid regulations, but which

nonetheless may be sued by a private party for violating

22

those regulations only if and as permitted by federal law.

See, e.g., id. at 514; Ex parte Young, 209 U.S. 123 (1907); In

re Ayers, 123 U.S. 443, 506-507 (1887); Verlinden B.V. v.

Central Bank of Nigeria, 461 U.S. at 486-489, 493."

Neither Mescalero nor Kake discusses enforcement, or

mentions tribal immunity from suit. This Court’s later

decisions in Potawatomi and Puyallup do address those

issues, and they hold that neither a valid state tax nor a

valid state fishing regulation may be enforced in a suit

brought directly against an affected Tribe.

3. State recognition of tribal sovereign immunity is

not a matter of comity under state law

In rejecting the sovereign immunity defense advanced

in Hoover, the Oklahoma Supreme Court relied in part

* Similarly, it is important to note that the issue of a Tribe’s sov-

ereign immunity from suit is quite different from the issue of a Tribe's

or State’s general regulatory or adjudicatory jurisdiction, which.

like that of any sovereign, is more closely tied to considerations of

citizenship and territory. Compare, e.g., Strate v. A-1 Contractors, 11°

S. Ct. 1404, 1409-1410, 1413-1416 (1997). The Oklahoma Supreme Coart

appears to have confused the two concepts, applying to tribal immunity

(which is absolute in the absence of explicit tribal or congressional

consent) a facts-and-circumstances test that seems to be taken from

the general jurisdictional context. Compare Hoover, 09 P.2d at 61,

citing Lewis v. Sac & Fox Tribe of Oklahoma Housiag Authority, 896

P.2d 503, 508 (Okla. 1994) (“Only that litigation which is explicitly

withdrawn by Congress or that which infriages upon tribal self-

government stands outside the boundaries of permissible state-court

cognizance.”), cert. denied, 116 S. Ct. 476 1995), with Strate, 117 S. Ct.

at 1416 (“Neither regulatory nor agjudicatory authority over the

state highway accident at issue is needed to preserve ‘the right of

reservation Indians to make their own laws and be ruled by them.’ ”).

% We also note that in bath Mesealero (see 411 U.S. at 146-147) and

Kake (see 369 U.S. at 62) it was a Tribe itself that had brought suit,

thus submitting to the jurisdiction of the court to decide the question

presented. Compare Three Affiliated Tribes, 476 U.S. at 891.

on this Court’s decision in Nevada v. Hall, 440 U.S.

410 (1979), for the proposition that a Tribe’s sovereign

immunity from suit in state court, like the immunity of a

sister State, could be decided by the state courts “solely

{as} a matter of comity.” Hoover, 909 P.2d at 61-62, quot-

ing Padilla v. Pueblo of Acoma, 754 P.2d 845, 850 (N.M.

1988), cert. denied, 490 U.S. 1029 (1989). That analogy be-

tween States and Tribes is a false one.

Hall sustained the California courts’ exercise of

jurisdiction over the State of Nevada, based on tortious

conduct by a Nevada agent within California. The Court

noted that, in the absence of other federal law, any

restriction on California’s judicial power to entertain the

claim at issue would have to be found in the federal

Constitution. See 440 U.S. at 414 & n.5; see also id. at 430

(Blackmun, J., dissenting). The Court observed, however,

that “the question whether one State might be subject to

suit in the courts of another State was apparently not a

matter of concern when the new Constitution was being

drafted and ratified.” Jd. at 418-419. Finding no evidence

that the Constitution was intended to strip the States of

their preexisting sovereign prerogative to exercise (or

to refrain from exercising) their “exclusive territorial

jurisdiction over visiting sovereigns” (id. at 417; see id. at

416-418 & n.13), the Court held that the Constitution gen-

erally leaves each State free to decide, as a matter of

policy and comity, whether and on what terms to accord its

sister States immunity from suit in its own courts. /d. at

418-427.

Hall is inapposite here. While the framers of the Con-

stitution may not have adverted to the possibility of suits

against one State in the courts of another (see Hall, 440

U.S. at 418-419), they were, as we have explained (see

pages 9-10, supra), specifically concerned about the

question of relations between the States and the Indian

24

Tribes. The Constitution addressed that question by

vesting the power over Indian affairs—-like the analogous

power over foreign relations—exclusively in the new

national government. Hall rests on the premise that the

Constitution embodies only certain mutual concessions

concerning the States’ otherwise sovereign relations

among themselves; but one of those concessions was each

State’s renunciation, in favor of the new national govern-

ment, of any power to carry on independent sovereign

relations with the Indian Tribes.” Thus, as we have

described (see pages 12-15, supra), the question of tribal

sovereignty is governed by a comprehensive body of

federal law that binds both petitioner and the State of

Oklahoma. A State is not free to decide whether or not it

will respect a Tribe’s immunity, because the degree of

comity due the Tribes is a matter of national, not state,

policy; and the policymakers are Congress and the

President, not the state (or federal) courts.

Indeed, with respect to tribal sovereign immunity from

suit in state court, a more appropriate analogy than the

immunity of a sister State is the immunity of a foreign

Nation. See Coeur d'Alene, 117 S. Ct. at 2034 (with re-

spect to the States’ sovereign immunity from suit, “Indian

tribes * * * should be accorded the same status as for-

eign sovereigns”). That question, too, for similar con-

stitutional and structural reasons, is one of federal law, to

be determined by the political Branches in the exercise of

their plenary power over foreign affairs. Verlinden, 461

U.S. at 486. For many years, under the rule of “grace and

” Thus, while Article I, Section 8, Clause 3 of the Constitution

grants Congress the power to regulate commerce “among the several

States,” in the same breath it confers the power to regulate the entire

Nation's commerce both “with foreign Nations” and “with the Indian

Tribes.” Cf. Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 153-154 &

n.19 (1982).

comity” that traditionally applied among national sover-

eigns, “the United States generally granted foreign

sovereigns complete immunity from suit in the courts of

this country.” Jbid.; see also Hall, 440 U.S. at 416-417.

Beginning in 1952, the Executive Branch adopted a more

restrictive view of foreign sovereign immunity, generally

permitting the exercise of jurisdiction in suits arising out

of a foreign sovereign’s purely commercial activities.

That position of the Executive was then binding upon the

courts under the principle that “(ijt is * * * not for

the courts to deny an immunity which our government

has seen fit to allow, or to allow an immunity on new

grounds which the government has not seen fit to recog-

nize.” Republic of Mexico v. Hoffman, 324 U.S. 30, 35

(1945). In 1976, Congress largely codified that approach in

the Foreign Sovereign Immunities Act, 28 U.S.C. 1602 et

seq. Significantly, however, the courts did not take it upon

themselves to abrogate the sovereign immunity of for-

eign governments in particular circumstances. That step

was left to the political Branches, as the Constitution

required.

In the exercise of the plenary power over Indian affairs

similarly committed to it by the Constitution, the national

government could, if it chose, render Tribes like petitioner

amenable to suit in state court on commercial contracts

signed outside the Tribe’s own territorial jurisdiction.

Congress has not adopted any such policy, however; and in

the absence of such a national political decision, the courts

of the States may not invoke their own notions of comity

as a justification for asserting jurisdiction over Tribes

in derogation of the rule of tribal sovereign immunity

recognized by federal law. Cf. Three Affiliated Tribes, 476

U.S. at 892-893; Banco Nacional de Cuba v. Sabbatino, 376

U.S. 398, 423-427 (1964).

D. Policy Considerations Support The Continued Rec-

ognition Of Tribal Sovereign Immunity In Cases

Involving Commercial Contracts

The Oklahoma Supreme Court identified “important

public policy considerations” that it believed supported its

jurisdictional reasoning. Aircraft Equip. Co., 921 P.2d at

362. Noting that “[cjontracts are effective when parties

know that the provisions of the contract will be enforced,”

the court observed that enforcement “protects all of our

citizens including tne tribes who voluntarily choose to do

business with their fellow Oklahoma citizens.” Jbid. In

the court’s view, “the tribes would have difficulty finding

anyone willing to risk his funds in unenforceable obliga-

tions.” Jbid. Thus, the court concluded, to honor the

Tribe’s immunity from suit would “chill tribal commercial

and entrepreneurial business.” Ibid.

As we have explained, the question whether the policy

considerations identified by the Oklahoma Supreme Court

warrant a revision of the present rule of tribal immunity

is one for Congress, not the courts of the several States.

Even if the Oklahoma courts were free to vary the exist-

ing federal immunity rule in exceptional circumstances,

however, nothing in the present case could justify such a

step. The existence of sovereign immunity does mean

that commercial contracts with a sovereign—whether a

State, the United States, an Indian Tribe, or a foreign

government—may be subject to rules different from those

that apply to contracts with private parties. See, e.g., In

re Ayers, 123 U.S. at 505 (a contract with a State

“is substantially without sanction, except that which

arises out of the honor and good faith of the State itself,

and these are not subject to coercion”); compare Three

Affiliated Tribes, 476 U.S. at 893. There is, however,

nothing unworkable or unfair about the resulting regime.

27

A sovereign’s immunity from suit for money damages

does not leave a potential commercial counterparty unable

to protect its interests. A seller or buyer of goods or

services may, for example, require that the sovereign pay

or deliver in advance, or it may raise its prices or lower

its bid to compensate for the increased risk of non-

performance. It may insist on escrow, letter-of-credit, or

other security arrangements to ensure that a transaction

will not be completed until the sovereign has performed

its obligations. Or it may simply refuse to deal with a

sovereign that will not consent to suit, if it deems the

likely gain not worth the risk or inconvenience (as it

might, for example, if the sovereign had developed a

reputation for failing to honor its obligations).

It is true, as the Aircraft Equipment court observed,

that the need for such measures may make it more

difficult for a tribal sovereign to find willing commercial

counterparties, or may, at any rate, increase the Tribe's

costs. That is a familiar problem for sovereigns, and there

are equally familiar solutions. A sovereign may, for

example, establish special commercial entities that are,

like private corporations, liable to suit, but only to the

extent of their own capital or other resources. See, ¢.g.,

note 6, supra. It may consent to suits against it in its own

courts, in all cases or with whatever conditions and ex-

ceptions it deems desirable. See, e.g.,28 U.S.C. 1346, 1491,

2674; Hoover, 909 P.2d at 62 (Oklahoma permits suits

against itself for breach of contract); Navajo Nat. Code

Tit. 1, § 554 (1995); id. Tit. 5, § 1567. Or it may consent,

in general or with respect to a particular transaction,

to waive its immunity and submit to the jurisdiction of

another sovereign." We may assume that, in the absence

1!) See Merrion v. Jicarilla Apache Tribe, 617 F.2d 537, 540 (10th

Cir. 1980), aff'd, 455 U.S. 130 (1982). We are informed that it is not

unusual for tribal contracts reviewed by the Department of the Interior

28

of congressional provision to the contrary or other special

circumstances, all these measures are available to Indian

Tribes, as they are to other sovereigns.

The existence of tribal sovereign immunity, then,

neither interferes with the Tribe’s management of its

commercial affairs nor imposes any unfair burden on those

who transact business with the Tribe.” On the other

hand, the doctrine does prevent the imposition of monetary

liabilities that the Tribe itself has not clearly agreed to

bear. As with other sovereigns, therefore, the doctrine

at least partially protects the Tribe as sovereign—which

is to say, the tribal public, whose collective interest the

sovereign represents—from unconsented liability for the

negligence, malfeasance, or simple naivete of its agents.

See United States Fidelity & Guaranty Co., 309 U.S. at

513 (“It is a corollary to immunity from suit on the part of

the United States and the Indian Nations in tutelage that

this immunity cannot be waived by officials.”). Moreover,

while the basic rule of tribal immunity may, in the absence

of some contrary provision of federal law, be modified

through clear, specific, and properly authorized waivers, if

the Tribe finds that course necessary or appropriate, the

converse is not true: In the absence of the basic rule,

the Tribe would have no adequate means to protect itself

under circumstances in which it would not advisedly

to contain specific, limited waiver provisions. Because immunity is

such an important attribute of sovereignty, the courts have always

scrutinized alleged waivers closely. To be effective, a waiver must be

properly authorized by the sovereign itself, not merely by an agent; it

must be clear and unequivocal; and its scope will be strictly construed

in favor of the sovereign. See, ¢.g., Lane v. Petia, 116 8. Ct. 2092, 2096-

2097 (1996); Santa Clara Pueblo, 436 U.S. at 58-59; United States

Fidelity & Guaranty Co., 309 U.S. at 513.

% Of course, the doctrine has no impact at all on commercial deal-

ings with individual members of a Tribe.

have consented to liability. Thus, while the recognition of

tribal sovereign immunity is a matter of mandatory

federal law, not open to modification by the courts on

policy grounds, the relevant policy considerations would

support the same result.

These general principles comport with what the record

below, and the decisions in related cases, reveal about the

transaction at issue in this case. A tribal entity agreed to

pay respondent $285,000 for stock in C)Jinton-Sherman

Aviation, Inc. (CSA). See page 3, supra. In the same

transaction, the Tribe agreed to pay Robert Hoover

$142,500 for additional shares of CSA. Hoover, 909 P.2d at

60. And, in a related transaction, the Tribe agreed to

assume a $180,000 debt in order to acquire the assets of

Aircraft Equipment Company—although there seems to

have been at least some question as to whether that pur-

chase was properly authorized by the Tribe. See Aircraft

Equip. Co., 921 P.2d at 360 & n.1.

So far as appears, each of the Tribe’s counterparties

in these transactions was a commercially sophisticated,

Oklahoma-based business or individual, presumably aware

of the rule of tribal sovereign immunity. Respondent in

this case could not have been unaware of that rule, because

the “Waivers and Governing Law” section of the otherwise

conventional Promissory Note specifically provides that

“{njothing in this Note subjects or limits the sovereign

rights of the Kiowa Tribe of Oklahoma.” J.A. 14. The

record in this case does not indicate whether the Tribe's

obligation on the Note was secured by the purchased

shares; but the Note had a term of only 90 days, and the

note at issue in Hoover, which was signed as part of the

same transaction, was secured by CSA shares, on which

Hoover foreclosed when the Tribe failed to make payment.

909 P.2d at 60 & n.3.

30

It is impossible, on the present record, to draw any firm

conclusion about the actual business agreement that

underlies this case. We review the few known facts only

to suggest that there is no basis for concluding that

recognition of the Tribe’s sovereign immunity will be at

all unjust to respondent. A no-cash transaction, with the

seller’s recourse explicitly limited to repossession of the

property sold (rather than a suit for the full stated

purchase price), would, for example, be an efficient way

to arrange the sale of an asset of highly uncertain value,

the seller thereby retaining some or all of the risk of

overvaluation during the period in which the buyer agrees

to make payment. If that was the business agreement

here, then respondent, understanding the Tribe’s immu-

nity from money damages, bargained only for the retention

or repossession of its shares in the event of non-payment.

Any cash recovery on the Note would, on that assumption,

represent an unnegotiated windfall to respondent. Partic-

ularly given the likely relative commercial sophistication

of the parties, and the fact that, by the time of the fore-

closure sale in Hoover, the shares of CSA were worth-

less (see 909 P.2d at 60 n.3), we see no reason to assume

that proper recognition of petitioner’s sovereign immunity

from suit will cause unfairness to respondent, rather than

preventing an equivalent unfairness to the Tribe.

31

CONCLUSION

The judgment of the Oklahoma Court of Appeals should

be reversed.

Respectfully submitted.

WALTER DELLINGER

Acting Solicitor General

Lois J. SCHIFFER

Assistant Attorney General

EDWIN S. KNEEDLER

Deputy Solicitor General

EDWARD C. DUMONT

Assistant to the Solicitor

General

DAVID C. SHILTON

ELIZABETH ANN PETERSON

Attorneys

AUGUST 1997